Small Businesses Bear the Brunt of Network Neutrality Rules

The Federal Communications Commission (FCC) admits at least 90 percent of the businesses that will be burdened by the new utility-style network neutrality regulations will be small businesses.

As required by law, the FCC must estimate the effect the new rules will have on small business. In total, 20,640 companies will be affected, of which 18,532 are considered small businesses by the Small Business Administration.

The new rules will invariably impose new compliance costs on businesses, which will hit small businesses like rural internet service providers (ISPs) and wireless carriers the hardest. In a filing on this issue, the Rural Wireless Association noted that they were extremely quick to adapt to previous rules by the FCC, but were dismayed as “engaging in a similar endeavor to comply with new and/or more stringent rules would be costly and further strain rural carriers’ limited resources.” While there has been much ire directed at cable companies in this rulemaking, as explained in the final order, “all but ten cable operators nationwide are small under this size standard.” Overwhelmingly, the companies affected will be small businesses. Those big companies will likely weather the legal storm, but the same cannot be said of the smaller broadband providers.

Only now are the full details of the network neutrality rules becoming clear, and sadly, small businesses and their consumers are in the crosshairs.

Firm Service

Number of total firms

Firms the FCC ranks as small

Broadband Internet Access Service Providers supplied over providers own facilities

[1] This is a conservative estimate. The Small Business Administration small business size standard of 1,500 or fewer employees does not match perfectly to the Census Bureau data, which listed 3,188 firms in this category, 3144 of which had employment of 999 or fewer employees.

[2] This is a conservative estimate. The Small Business Administration small business size standard of 1,500 or fewer employees does not match perfectly to the Census Bureau data, which listed 1,383 firms in this category, 1,368 of which had employment of 999 or fewer employees.

[3] This is a conservative estimate. The Small Business Administration small business size standard of $30 million or less in average annual receipts does not match perfectly to the Census Bureau data, which listed 1274 firms in this category, 1252 of which had annual receipts less than $25 million.

[4] This is a conservative estimate. The Small Business Administration small business size standard of 1,500 or fewer employees does not match perfectly to the Census Bureau data, which listed 2,048 firms in this category, 1393 had annual receipts under $10 million.

[5] This is a conservative estimate. The Small Business Administration small business size standard of 1,000 or fewer employees does not match perfectly to the Census Bureau data, which listed 1,174 firms in this category of which 1124 had 1,000 or fewer employees.